(1) This section applies where -

(a) a credit union makes a loan to a member of the credit union, and

(b) at the time the loan is made, the member's paid-up shareholding in the credit union, excluding any deferred shares, is equal to or greater than his total liability (including contingent liability) to the credit union, whether as borrower, guarantor or otherwise.

(2) On the application of the member to the credit union, the loan shall be treated for the purposes of this Act as a secured loan.